Page 203 - Albanian law on entrepreuners and companies - text with with commentary

3. Many efforts have been made to define parameters of the ‘group’ in order to challenge
wrongful decisions in any place where the group has significant operations. Due to these
difficulties, the EU has not pursued the finalization of its proposal of a Ninth Directive on
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Company Groups. The EU’s legal attitude has become ‘pragmatic’ by addressing single
problem areas of corporate groups like annual accounting in a group and the acquisition of
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major shareholdings in publicly held companies by take-over bids. Likewise, drafters of the
Law of Groups of the new Company Law have used regulatory and practical experience with
the group phenomenon in the EU and elsewhere as a regulatory ‘tool kit’ in order to come to
terms with the problems arising here. “A well-known and central difficulty concerning MNC
accountability is that of ‘jurisdictional arbitrage’. Frequently, in the case of environmental
hazards, a parent company can hive out risky or dirty business abroad. Problematically, if
there is a violation of the environment the subsidiary company will generally not be sued,
either because the venture is in a state which is politically unstable and/or lacking in effective
environmental regulation or enforcement practices, or because the subsidiary can be starved
of finance by the parent and placed in danger of insolvency. Meanwhile, suing the parent
company is problematic because each company in the MNC group is constructed as being
completely separate. Each jurisdiction, moreover, has a limited jurisdictional reach, whilst, in
effect, each company in the MNC group is insulated by the operation of the ‘corporate veil’
isolating the companies making up the group. In this sense, the MNC makes a particularly
complex target for the imposition of liability: there is no single MNC ‘entity’, as such.
Constructing a form of ‘enterprise liability’, however, would potentially mean that the whole
MNC enter- prise could be sued simultaneously, making it simpler to force the directors of
each company to respect standards of environmental probity and any relevant fiduciary
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duties”.
The new Company Law structures the group phenomenon as follows:

a) When defining the first form of parent-subsidiary relationship, the control group,
the Albanian law-makers took the experience of the German Law on Groups
(Konzernrecht) and of other jurisdictions with respect to a ‘controlling influence’ or
‘dominance’ into account. In order to determine, if a subsidiary is “accustomed to
act in accordance with the directions or instructions” of the parent company,
Article 207 (1) does not require that such control is based on shareholdings,
agreements or de facto (economic) influence. In this respect, the new Law goes
beyond the German approach which has experienced great difficulties with his
restrictive basic concept of accepting special group regulations only where

174 Ibid. 57-59. The Proposal was strongly influenced by German ‘Konzernrecht’ which tries to favour dominance
agreements and to discriminate de-facto groups. In spite of its reference to both cases of group building, the new
Company Law has not adopted this valuation.
175 The Directive on Take-Over Bids was finalized in 2003. As mentioned in the introduction to the 1st edition of the
Commentary (2009) on p. 5 et seq., Albanian law-makers decided not to introduce such provisions as the regulated
securities market which is about to emerge has its own dynamics which could be regulated more appropriately by a
special law, similar to the solution to other Member States (like Germany).
176 J. Dine “Jurisdictional Arbitrage by Multinational Companies: a national law solution”, Journal of Human Rights and
the Environment, Vol 3, No. March 2012, pp. 44-69, p 44.
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